A husband and wife both enjoyed the same hobbies and started a small business based on what they loved doing. They were experts at what they did, knew how to market their products and enjoyed excellent customer relationships. But they failed at business planning, not calculating the amount of tax that was due and so had to close the business within a year.
A grim reminder of small business obituaries. Stories about start-up and small business failures abound. Over the past three years we’ve all seen many businesses go to the wall. Some surveys estimate that more than 50% of small businesses fail in the first year and 95% fail within the first five years.
Before you commercialise your brilliant idea check out some of the biggest mistakes below that businesses typically make. The mistakes are based on research by credit organisations as well as small business surveys that look into the main reasons why businesses go belly up.
The majority of businesses cite economic reasons for their failure. But at the same time up to 90% of all business failures can be traced to management mistakes.
A reader asked me this great question a week or so ago:
QUESTION: I’ve read about all these innovators below the age of 30 forming new businesses, mobile apps and Internet businesses. What chance has someone got if they are older? Is it too late after a certain age to innovate?
CHESNEY: Right off I’d say that age doesn’t matter at all. But at the same time who’s going to argue that youth doesn’t have a strong head start? Especially when it comes to energy and drive. And the reason why so many young people are making it especially in the online world is because they have grown up with the technology.
In 1996 McDonald’s introduced its more sophisticated Arch Deluxe burger which was marketed as a “burger with grown-up taste”. The burger came with peppercorn bacon, served on a potato flour sesame seed bun, with lettuce, onion, tomato, cheese and a secret mustard and mayonnaise sauce.
The $100 million ad campaign flopped. Why? Most people go to McDonald’s for a quick bite – a tummy filler. They don’t see McDonalds as a purveyor of gourmet meals.
Visiting the city of Cape Town I was surprised to see its afternoon newspaper transformed into a tabloid after packaging itself for 155 years in broadsheet format.
The maiden editorial shouted “Here’s the future” with loud protestations that the newspaper would not become a frothy “tabloid” but a sober “compact”.
Yet you had to thumb through a feature lead story on the front page and several more feature pages until you came across a few news bites tucked deep inside the middle.
Mainstream, traditional media are in a frenzy to innovate because they are bleeding from online media. Today’s wired generation has a short attention span and is addicted to social media. Even companies are battling to know their shareholders, who buy online and are shareholders for as little as 24 hours.
Asking what-if questions can help spark new ideas but you’ve got to ask the right ones. Right ones? Shouldn’t you let rip and come up with anything? Well, you might get ones like this:
What if you stand outside your house and look straight up for at least a year or so – would you appear on Google Earth?
What if you were a hotdog and you were starving, would you eat yourself?
Perhaps these what-ifs could get you thinking with a new perspective. But will they? No they won’t, I hear you say. You’re right. Why is that? Let’s see:
What-if questions help you see the ordinary in a new light, to gain new perspectives. The ideas that result from “what-if” questions are merely seeds that may spark explorations into areas that you have never thought of before. Asking “what-if” questions is unlikely to present you with a practical idea that you can implement right away.
You need to ask further questions that lead to new ideas. The initial “what-if” question is really only a springboard to get your imagination working.
Now, listen up. What comes next may surprise you:
A man ran a small service station and a restaurant outside of town on the main highway to Florida in the United States. He concocted a seasoning for fried chicken. He made a “nice living” until they changed the highway into the Interstate system and the new road bypassed his business. Colonel Harland Sanders was 66 years old, looked at his $105 Social Security cheque and decided what if he used the money to try franchise his chicken recipe. What if he were to take 5 cents from a chicken just as Mr Woolworth had built up his business with his five-and-10-cent stores?
From a simple idea – a what-if question – he launched an international fried chicken franchise that spread worldwide.
What “what-if” questions could you ask yourself?
Here are some that could get you started coming up with your own:
What if you could do something that would make your customers laugh so they feel happy buying from you?
What if you were a product, what product would you be and why?
What if you were a service, whose problems would you solve and how?
What if you were a search word on Google, what would you be?
What if your new product was a woman, what would she tell other women?
What if your competitor created your product, what would they do?
What if you could anticipate the needs of your customers before they even know it?
Try some what-if questions yourself. See how many you can come up with. It’s not as hard as you may think. Write down 20 of them and select your best three. Take these three and see how you can expand them.
For example, the first question may lead to: what if we make customers feel welcome when they make first contact with your business whether it’s off-line or on-line? What if we shipped their products so quickly to them that they felt thrilled by our service? What if we sent customers a thank you note telling them how delighted we are with their purchase and that if they have any questions or problems, they can contact us immediately? And when they do, what if we received their complaints with a smile?
To use what-if questions effectively, you need to be imaginative as possible but remember that they are merely a springboard to further questions that are relevant to your business. They can provide you with valuable insights into how you could launch new products and services and improve those that you already have.
Hooked yet on what-if questions?
Try out some of your own and see where your inspiration leads you.
What if you came up with a hot new business idea for a product or service?
Innovation is about challenging even long-standing, tried and tested or cherished beliefs. But are we really prepared to throw out the window what we know and try something new?
Take brainstorming. For years brainstorming meetings have been held where there are grave warnings that no criticism is allowed. The no-criticism rule has been sacrosanct to encourage participants to open up and offer their ideas in a friendly atmosphere.